WATCH · Software Delivery_
Why Your Software Project Will Cost More Than the Quote
Saleem Beg · Founder, Teque
● 1:57 · Posted 4 months ago
KEY TAKEAWAYS_
- Build 20-30% contingency into your budget — not pessimism, reality
- Prioritise ruthlessly so you know what to cut when costs rise
- Structure payments around milestones, not completion
- Ask about their track record on budget accuracy
TRANSCRIPT_
Your software project will cost more than the quote. I know that sounds cynical, but let me explain why and what you can do about it. Studies show that over half of the projects exceed their budgets, often by significant margins.
This isn't because agencies are dishonest. It's because software estimation is genuinely hard and incentives are often misaligned. When you ask for a quote, you're asking someone to predict the future. How long would it take to build something that's never been built before? For users whose behavior is unknown using requirements, that will almost certainly change. The
honest answer is I don't know exactly, but that doesn't win contracts. So, agencies give you their best guess, often optimistic because they want the work. But here's how to plan for reality. First, build a contingency into your budget. Not 10%, 20 to 30%. This isn't pessimism. This is acknowledging reality. Second, prioritize ruthlessly.
Know which features are essential and which are nice to have. When costs rise, you will know what to cut. Third, structure payments around milestones, not completion. Pay for working software, not promises. Fourth, ask about their track record. What percentage of projects came in on budget? If they claim 100%, they're either lying or padding quotes by 50% upfront. The quote isn't a contract with
reality. It's a starting point for a conversation about what you can actually achieve.
“Studies show that over half of the projects exceed their budgets, often by significant margins.”
Prefer to read? This take is also a written article.
Read the article →
